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Questions and Answers
What happens to the quantity of labor demanded when wages decrease in a competitive labor market?
What happens to the quantity of labor demanded when wages decrease in a competitive labor market?
- It fluctuates
- It decreases
- It increases (correct)
- It remains the same
What effect does higher wages have on the quantity of labor supplied in a labor market?
What effect does higher wages have on the quantity of labor supplied in a labor market?
- It decreases
- It fluctuates
- It increases (correct)
- It remains unchanged
What is the term used for a situation where a single buyer or a few big buyers have significant bargaining power in a labor market?
What is the term used for a situation where a single buyer or a few big buyers have significant bargaining power in a labor market?
- Monopoly
- Oligopoly
- Monopsony (correct)
- Plutocracy
What term is used to describe a business using its bargaining power as a major buyer of labor to pay lower prices, including lower wages?
What term is used to describe a business using its bargaining power as a major buyer of labor to pay lower prices, including lower wages?
In a competitive labor market, who determines the wage for workers?
In a competitive labor market, who determines the wage for workers?
What happens to the quantity of labor demanded when wages decrease in a competitive labor market?
What happens to the quantity of labor demanded when wages decrease in a competitive labor market?
What does the law of supply suggest about the quantity of labor supplied when wages increase?
What does the law of supply suggest about the quantity of labor supplied when wages increase?
What is the impact of a single or few big buyers, with 'buying power', in a labor market?
What is the impact of a single or few big buyers, with 'buying power', in a labor market?
What is monopsony power in the context of labor markets?
What is monopsony power in the context of labor markets?
In a competitive labor market, who determines the wage for workers?
In a competitive labor market, who determines the wage for workers?
What happens to the quantity of labor demanded when wages decrease in a competitive labor market?
What happens to the quantity of labor demanded when wages decrease in a competitive labor market?
What is the impact of a single or few big buyers, with 'buying power', in a labor market?
What is the impact of a single or few big buyers, with 'buying power', in a labor market?
What term is used to describe a business using its bargaining power as a major buyer of labor to pay lower prices, including lower wages?
What term is used to describe a business using its bargaining power as a major buyer of labor to pay lower prices, including lower wages?
What determines the wage in a competitive labor market?
What determines the wage in a competitive labor market?
What does the law of supply suggest about the quantity of labor supplied when wages increase?
What does the law of supply suggest about the quantity of labor supplied when wages increase?
Study Notes
Labor Market Concepts
- In a competitive labor market, when wages decrease, the quantity of labor demanded increases.
- When wages increase, the law of supply suggests that the quantity of labor supplied also increases.
Monopsony Power
- Monopsony power refers to a situation where a single buyer or a few big buyers have significant bargaining power in a labor market.
- This situation gives the buyer(s) the power to determine the wage for workers.
- As a result, the buyer(s) can use their bargaining power to pay lower prices, including lower wages, a concept known as monopsonistic exploitation.
Competitive Labor Market
- In a competitive labor market, the wage for workers is determined by the interaction of supply and demand forces.
- When wages decrease in a competitive labor market, the quantity of labor demanded increases.
- Conversely, when wages increase, the quantity of labor supplied also increases, according to the law of supply.
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Description
Test your understanding of labor demand and labor supply with this quiz. Explore the concepts of the law of demand and the law of supply as they apply to buying and selling worker time. Analyze the relationship between wages and the quantity of labor demanded and supplied.
